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How Monero’s proof of work works

blog.alcazarsec.com

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Re: How Monero’s proof of work works

#91

Post by tardedmeme »

ballofrubber1 wrote: post #73
dhosek wrote: post #71

Earlier quoted context omitted.

One of the weird things about our world is that money is central to everything, but it’s hard to understand how it works. There’s a great deal of handwaving around how, for example, dollars are created, much of which is, in fact, not correct at all (most dollars are created not by the government, or even the Federal Reserve, but by private banks, via a mechanism which I will not pretend to fully understand). The big…

I’d argue that this is more of a feature than a bug. The assumption behind the “deflation is bad” argument is that spending itself is the goal. But spending is not automatically good. Productive spending and productive investment are good. Wasteful consumption, speculation, and forced risk-taking are not. If money holds its value, people become more selective. They still buy food, housing, tools, entertainment, exper…

In a deflationary system, rich people just hold money, and earn more in interest from holding the money, than everyone else earns combined. They use that interest to buy things from the poor while not producing or investing themselves. Poor people realize if they switch currencies they can have more things because they don't have to give a percentage of everything to the rich. This makes the system unstable.

Bitcoin might be approaching it.

Spending shouldn't be the goal, but exchange of goods and services should be. Representation of real value should be a goal. If you can receive real goods and services as a consequence of holding numbers on a spreadsheet, instead of a consequence of providing real goods and services yourself, the economy has a problem. Maybe a system with zero inflation or very slight deflation can be stable, but the extreme deflation seen in Bitcoin is destabilising.

Re: How Monero’s proof of work works

#92

Post by ProllyInfamous »

dgacmu wrote: post #3

If folks are interested in the old Monero PoW function (and, uh, the reason they changed it), I wrote up a thing about it a long time ago: https://da-data.blogspot.com/2014/08/minting-money-with-mone... The history of people trying to design GPU or ASIC-resistant proof-of-work functions is long and mostly unsuccessful. I haven't looked into RandomX; it's possible they've succeeded here (or possible that with the alt-…

I partially heat my home by running the default Monero client on old Xeons (heat ejects near my desktoes). As I only mine when it's cold outside (otherwise using resistive heating), there is no actual net electricity cost. IMHO it's not "worth it" for an individual to buy equipment specifically to mine crypto... but if you already have an old machine AND you heat without a heatpump, it's a free hobby/heater.

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To anybody else that is syncing a fresh monero blockchain copy (i.e. installing the official client), I recommend using the custom node flag ` --db-sync-mode safe ` — which is slower but corruption-avoiding — before node's initial bootup. Without safemode, any halt of the client will [most likely] corrupt the local blockchain (losing days of DL/verification).

Also, if you use an SSD for storing any blockchain (as recommended by monero team... but not by me), know that its lifespan will be greatly reduced from the constant IO/access. Personally, I recommend safemode (see above) on a 7200RPM spinner (HDDs effectively don't wear during IO/access).

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What are your thoughts on running xmrig vs. the default getmonero.org client? Would you in general agree that monero remains ASIC-resistant?

Re: How Monero’s proof of work works

#93

Post by kerkeslager »

j4cobgarby wrote: post #5

I never quite understand this stuff, maybe someone can help. Are cryptocurrencies supposed to be a potential replacement for real life cash? This was my understanding of the motivation behind Bitcoin, at least. If so, why does it make sense that people can "generate" cash by proving some amount of work done? This of course cannot be done with normal cash. Is the main functionality of these cryptocurrencies supposed t…

> Are cryptocurrencies supposed to be a potential replacement for real life cash? This was my understanding of the motivation behind Bitcoin, at least.

This was the original stated purpose, yes. But this works poorly in practice. Hypothesized frictionless tooling that would make it easy to make purchases with crypto has not emerged.

Nowadays it's held more like a speculative asset with value that comes from scarcity and demand, much like gold (though gold has some industrial application which Bitcoin does not).

Re: How Monero’s proof of work works

#94

Post by kerkeslager »

Synaesthesia wrote: post #80
kerkeslager wrote: post #79

Side question: what's the least scammy and complicated way to buy Monero these days?

Buy some other crypto like Litecoin then exchange it for Monero, there are quite a few exchanges around that do it anonymously.

...such as?

Re: How Monero’s proof of work works

#96

Post by tardedmeme »

ArchieScrivener wrote: post #81
yfontana wrote: post #55

Earlier quoted context omitted.

> In Bitcoin you don't generate cash, you earn block rewards for acting as a consensus broker which otherwise would require a central banking settlement layer. This activity, tied directly to the transaction layer, acts to maintain the equilibrium between increases in goods and services and expansion of the money supply. Block rewards have no connection to transaction volume or economic activity, the protocol is desi…

Yes, they absolutely do. That's what dictates difficulty. It is not deflationary, deflation is not the same as supply constraint. Deflation is a reduction in price level, constraining supply is precisely how it moderates the equilibrium of value which is why it is a threat to existing monetary control.

The bitcoin price level reduces as an effect of bitcoin's design, therefore it's a deflationary design.

Well, for now. Obviously it can't reduce forever, and it will eventually slam back up to infinity (bitcoin will collapse) when no normal person feels like it's worth getting any because so much of it is already owned by wealthy people. Until that happens we're surfing the Ponzi wave. Inflationary designs are way more stable.

Re: How Monero’s proof of work works

#99

Post by tardedmeme »

ulrikrasmussen wrote: post #17
j4cobgarby wrote: post #5

I never quite understand this stuff, maybe someone can help. Are cryptocurrencies supposed to be a potential replacement for real life cash? This was my understanding of the motivation behind Bitcoin, at least. If so, why does it make sense that people can "generate" cash by proving some amount of work done? This of course cannot be done with normal cash. Is the main functionality of these cryptocurrencies supposed t…

It's just a mechanism to incentivize mining. The alternative is that miners are paid only via fees, but that risks making it prohibitively expensive to transact. Minting new coins distributes the cost of mining over all holders by inflating the currency a little bit. Fees are still necessary to avoid spamming.

Bitcoin was intended to be funded entirely by transaction fees and the minting was just to jumpstart the currency, which is why the new coin minting rate tends to zero. This was a naïve mistake. Other cryptocurrencies have start high and approach a lower nonzero value.

Re: How Monero’s proof of work works

#100

Post by nmz »

Hilliard_Ohiooo wrote: post #10
Aeroi wrote: post #7

[flagged]

You'll get nothing but up votes here on HN, a lot are still angry they missed the boat. But solving the problem of how to transfer value trustlessly and anonymously, instantly anywhere in the world is one of the biggest breakthroughs since the Internet. Amazing how in a few short years kids started growing up with Bitcoin and don't understand how it work or why it exists :(

Well, it seems he wasn't, he's not gonna get upvotes though, HN is startup culture and startup culture is selling dreams until it works or you notice too late you got robbed.

And who's gonna admit that bitcoin is a ponzi scheme when all of their savings are in it? you can't, it would devalue your own money, so you're trapped, you can only further invest in it.

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